The Confederation of Indian Industry' said on Monday that the government was running out of time to spur growth and urgently needs an "economic revival package." The appeal came after India recently posted 5.3% quarterly growth, the slowest in nine years, down from blistering 9% plus expansion a few years ago.
"Macroeconomic conditions are worsening at a faster pace than anticipated and we need to stem this," said CII president Adi Godrej, in a stark warning to the Congress party-led government about the state of Asia's third-largest economy. "I am requesting that an economic revival package be announced" by the government and central bank, Godrej said in a meeting with C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council.
India's economy is performing worse than during 2008-09 when the global financial crisis erupted, said Godrej, a billionaire who heads Indian consumer goods conglomerate Godrej Group.
Godrej said he knew that the government's room for maneuver was limited with India battling to rein in gaping fiscal and current account deficits.
But unless government and central bank act now, "a few months down the line the economy would probably go beyond the threshold where any credible intervention could salvage it", the CII president said.
"The economic stimulus provided during 2008-09 proved to be useful and we saw growth pick to eight-percent plus levels," he said.
As part of steps to revive the economy, the government must implement long-delayed economic reforms such as opening up India's retail sector to more foreign investment, Godrej said. It also needs to overhaul its patchwork tax system to bring in more revenue and boost business confidence, he said.
Even with inflation still stubbornly strong, the central bank should ease India's high interest rates, Godrej added, noting rival China has reversed its credit tightening policy to spur growth.
Copyright Agence France-Presse, 2012